tv Your Business MSNBC December 6, 2009 7:30am-8:00am EST
with unemployment on the rise, many people are taking a chance and starting their own companies. we'll tell you what steps you need to take to make yours a reality. we'll introduce you to a woman whose struggle with weight loss became a financial gain with her own company. find out how two entrepreneurs turned their jobs into small businesses. that's all coming up next on a special start-up edition of "your business."
hi there everyone. i'm j.j. ramberg and welcome to "your business," where this week' were giving you tips and advice on how to get your business start and and how to make it grow. so many people have a business to start. how many people are brave enough to do it? it achb takes something like losing your job to give you just the push you need. this may be the perfect time for so many to act on ideas that had been pushed to the back burner. recently i made an amazing woman who with basically no experience and very little money risked it
all to start her dream business, and it's working. >> two years ago kim and mark benson were down to their last $18,000. >> very scary. we have four children, a mortgage, middle income america. >> a victim of the economy, mark lost his job at a distribution company. >> i had been with the company for about 13 years, and for reasons that are still a little unclear to me, i was let go. >> neither mark or kim had any prospects for other employment, and they didn't even look. what they did in retrospect even sounds crazy to them. ♪ we're never going to survive unless we get a little crazy ♪ >> here was our one opportunity, and it was either sink or swim, do or die. >> kim had become somewhat of a
food and knnutrition expert and had an idea for a business making low-calorie bagels. they took that $18,000 and started kim's light bagels. most of the cash went to the packaging. >> i said to mark, if this doesn't work, we're going to have 100,000 doggy poop bags. >> the chances for that would have seemed high. neither kim or mark had any experience starting up, let alone running a company. >> we aren't entrepreneurs and business people. we didn't come across this because we were scoping out what was the best business angle. >> what they did have was an amazing amount of faith that this would work and a sense that they just wouldn't take no for an answer. >> i spent weeks on the phone and the owner is not here, can you call back. i said the same spiel over and over. >> when you meet the two of them, it becomes less surprising that something so unlikely worked out. before kim became the ouner of kim's light bagels, she has already done something else
pretty astounding. two years ago she weighed 347 pounds. hard to imagine when you look at her now. listen to how much she lost. >> 212 pounds, 14 dress sizes, four ring sizes. >> after an appearance on "the today show" -- >> the only way you'll never lose weight is if you stop driving. >> a cover photo for prevention magazine, she was starting to develop a bit of a following. >> people were e mailing me, how did you do it? >> this helped her realize she could do anything she wanted. so she started her bagel company and started her website doing online weight watcher meetings. >> this week's meeting clip is all about stress and dieting. >> and wrote a cookbook. >> they all tie in to together. people find my story on the back of the bag of bagels gorks to the website, go to the meetings, they come to my website because they've heard about me at different weight loss groups. they go out and buy the bagels. they all tie in together. all different venues of support.
>> today things are booming for kim benson enterprises. they sell more than 15,000 bags of bagels a month and have more than a thousand members to the website. they're far from out of the start-up phase. ask her employees. peter powe is the office manager, but only in title. >> we all try to help each other out and jump anywhere needed. if someone needs to dlifer bagels and that person is out, we go deliver bagels. >> the offices are still right here in kim's home in connecticut where birds, dogs and kids mingle with the employees at any given time. >> i have learned rather quickly not to walk down the steps in my bath robe, saturday, sunday, monday, ever. just don't do it. >> are you hoping for a time when you move this out of a house and into an office? >> we're ready. we're really ready. it's become our world. we want it to be an important part of our world, but not our whole world. i think we're all ready for a little break, a little home and
business. >> no doubt that's easier said than done. as with so many entrepreneurs, kim's business has become a near obsession. even taking over her vacations. on a recent weekend kim and mark stole away for a couple days at a bed and breakfast. well, sort of. >> we got to meet with supplier and do some business. we had the whole night and the next day. it was really fun. >> we had a whole four hours -- >> a whole four hours, yeah. it's a lot. you know what, three years ago we couldn't afford heating oil for our home. today the business not only provides for us, but for eight other families. that's huge. >> there's no question kim loves what she does. and looking back, she admits, a little ignorance was exactly the ingredients she needed to skook up kim's light bagels. >> if i knew then what i know now, i don't know if i would have done it. it was crazy. but i'm so glad i didn't know
because i'm glad we did it. it's wonderful. there are obviously plenty of risks in getting your business started. how do you avoid the pitfalls? the erica min hand is a former venture capitalist, now the ceo of healthy mamma enterprises. gene marks is the president of the marks group. and he also pens an online column called "quicker, better, wiser." you're in the middle of this yourself? >> i am. just launched my own company not less than a month ago, mamma tini. >> i love this story. we were talking before that no investor would have touched this? >> first of all, i think she has very understanding neighbors. you're right. no investor would have touched this. $18,000, no experience, we have people on the show looking for
money and venture capital lifts want to see a track record. she proved it all. it's a really impressive story. >> i think it was a great example of how important it is for certain types of business to really bootstrap. she seemed like she did a great job, used that $18,000 incredibly well and got a big return for her buck. >> i went to business school. you were a venture capitalist. oftentimes we're told, you're telling people, i need a business plan, i need to see your financials, what are your five-year projections. she didn't do any of that. what's the lesson we take away from that? >> i can tell you one thing i really appreciate about this, it's not about the bagel. it's about the community she built around the bagels. it's about losing weight, the cookbooks, her fans. i see so many people -- they're plumbers, but it's not about plumbing. it's about redesigning your bathroom or kitchen. you're not just a landscaper, but a designer of a garden.
that's exactly what she did. she looked at one thing, bagels, and created a community around that and built a fan base around that. that is really important to me. >> i think what you're also bringing up that's so important is it's about having the passion for what you're doing. you want to have a plan, but just having a plan is not good enough. you have to have the passion, too. she has that. >> i went to some of the stores with her and watching her interact with the customers and the people who own the stores, you've got the magic. i walked away being so excited about her business. as a small business person, maybe somebody who lost their job who has had this idea for years about starting some sort of company, doesn't have very much experience, do you say go for it? look. it worked for her. >> if you're passionate about what you dorks of course. there has to be pragmatism. this is my accounting days talking. there has to be a way to pay the bills. you can't be completely going out there without any time of caution. >> these guys took a risk. they had $18,000, that is it.
two kids in college, two young kids and a mortgage and they spent it all on this packaging. >> no risk, no reward. >> sometimes you have to do what you've got to do. a big world out there. i admire them for taking the shot. that's what america is all about. >> i admire them, too. time to answer some of your business questions. all of these are focused on people who are starting up. the first one is an e-mail from judy who writes, i'm starting a hydro thermal water massage business for dogs called healing water canine experience. how do you project income and have equity when you've not started your business yet. >> this is a common question that most entrepreneurs have. equity is pretty simple. your equity starting in the business is basically whatever cash you put in. if you took $50,000 and that was your original checking account balance where you start buying things, $50,000 is your equity. that's not necessarily the valuation of your business, the
total valuation of your business might be more. it may be a million or a little more depending on how great your idea and what the market opportunities is. in terms of projecting income, what you simply want to do is you want to identify probably on a monthly basis how many customers you expect to have, multiply that by the average cost of service, deduct your costs of actually providing the service, marketing and any overhead that you have, that should help you come up with moongly income projection. >> so there's the math. gene, how specific does this have to be? how can you get it right? do you need to get it right? >> you've better know your market. i hope she's starting this business in beverly hills and not philadelphia. if threes demand out there, hopefully she's able to project that. i couldn't agree with erica more, it's all in numbers. you have to say to yourself how many dogs am i going to be seeing? >> research. a lot of research.
let's go to the next question from andrew. i'm in a catch 22. i have an idea and need some advice from some experts i know. but these are the same people who i'm going to ask for money from the idea. is it okay to ask them questions first, or do i need to sound like an expert already when i talk to them? this is a good question. >> you know, this is the big dilemma. of yours your investors are going to provide you with more than cam tall. they're expecting they'll provide you with the advice. i would try to maybe set up some sort of informal meeting with the people who you're trying to get the information from before you actually do your formal pitch. the last thing you want to do is go in on your official pitch-for-money day and ask a million questions. >> his question may b i'm going to ask for money later on, do i want them to think i'm smart from the get-go? >> i think being disen generous and fake from the beginning is the best practice. if investors are putting money
into their business, they're putting money into you. you let it all hang out. >> you should do your homework beforehand. >> make sure your questions are smart questions. it's probably likely that you can figure out a way to get the information that you need before you even bring up the concept of actually asking for x dallas. cover those bases first. >> let's move on to the next question. this is from melissa who writes i recently started my company and just have three part-time employees. one of them is good but is reluctant to do some of the things you need to do in a startup but she thinks are beneath her. i need her because i need her expertise. >> this question drives me nut. this is an economy that has 10% or 11% employees. the question is have a part-time employee who has some kind of expertise. unless she has something that is incredibly valuable that can't be replaced, i have little
patience for that. everybody pitches in to do what they've got to do. there are a lot of people who would be real happy to have her joob. >> i feel like one of the biggest parts of running small business is the culture of it. i think as a manager and leader, there are two things you have to do. number one is lead by example. you wouldn't have a culture where somebody would think something is beneath them if you're there taking out the garbage or scrubbing the sink. the second -- another really important skill to have as a manager is be able to directly tell your employees what you expect of them. so there's no reason you shouldn't be able to directly tell that employee, listen, we're having a problem, let's address this and move on. >> thank you so much for all your advice. stick around because you'll be evaluating an elevator pitch later in the show which should be fun. if any of you have a question for our experts, go to our website, our address is your
dlooes business.msnbc.com and submit a question for our panel. sometimes it pays to stick to what you know. and that's why many people pick their contacts and expertise from their jobs and use them to start their own companies. that was the case with two women who went from jobs in the fashion industry to stylish startups. >> reporter: stacy kerner left a 12-year career as a department store cosmetics buyer and quit this tony section of chicago to form her own beauty business. >> even members of my family thought that i was crazy. my grandmother finally said to me one day, when are you going to stop this craze iiness and g back to your job? >> janice moskoff left a prestigious management job with
a fashion designer to start up her own retail business. >> it's tremendous risk when people think you're being fool hearty. >> the two have never met, but they have a lot in common. both turned their corporate jobs into independent businesses. >> i came up with the idea to start beauty on call while i was still a marketing buyer for nordstrom. >> her plan hatched when she noticed everyone kept hammering her for names of people to work at special agents. >> there's no staffing agency that specialized in the beauty industry and someone needed to really develop a program for freelancers that would help these cosmetic company's. >> moskoff's business idea came when she and her husband decided to relocate to another city. that's when she noticed there were no high-end shops offering
clothes at discount price sgls buying the merchandise at 40% to 90% off retail prices. >>. >> both say they wouldn't be where they are now if they hadn't learned the ropes and worked with the pros at their old jobs. >> i developed many contacts through my years as a nordstrom buyer and nurtured those relationships through the years. i'm able to call on different cosmetic companies i've worked with for many years. >> success in moskoff's business requires access to the exclusive designer and vendors she worked with back at her fashion jobs. >> we actually just talked to the designer and we're going to be ordering more of them. >> we actually have to leverage the relationships i had while working in new york and build new relationships and create an environment that be signers feel confident about selling to because they're worried they're selling at discount and they won't just sell to anybody. >> today they both thrive on the
challenge of being on their own. >> when people ask you for advice, always tell them to make sure their have a solid idea, but then also make sure they're going to have the time and the money and the desire to see it through. because just having a great idea is just the beginning. it really takes a lot of time, a lot of hard work and i think a lot of people don't realize. they think it's going to be easy. ♪ you've got the look still to come, rich sloan of start-up nation shares important steps you need to take when thinking about launching your business. today's elevator pitcher hopes her decorative wine bag startup will put our panel in the mood to celebrate and invest. i'm katrina markoff, owner of vosges haut chocolates. we combine chocolate with exotic roots, flowers and spices to create tastes that tell cultural stories.
but in today's economy, how do you run a business that's about indulgence, - yet maintain fiscal responsibility? - ( cash register bell dings ) selling prospective clients can require more than truffles with hungarian paprika to seal the deal. so to make every dollar we spend do the most for us, we use our american express open charge card. it's the card that understands what my business needs. we use membership rewards points to visit clients and vendors all over the world. and we rely on open's concierge service to get our clients into the top hotels and restaurants. which makes us look pretty sweet. when you're selling exotic chocolates, having a card you can count on isn't a luxury. it's a necessity. announcer: today how you run your business is anything but typical. so use the card that isn't your typical credit card. the american express open charge card. to see what an open charge card can do for your business, visit open.com/yourbiz or call 888-550-open.
today, we are focusing entirely on start-up companies. maybe you have had a dream of being an entrepreneur. our guest has some easy to follow tips to help you build a start-up success. rich sloan formed start-up nationa online network with information. hey there, rich. so good to see you. >> good to see you, too, j.j. >> you have a fun job. i love talking about start-ups. >> start-ups are alive and well in america, even in this economy. we published a ranking of 100 home-based businesses and people are doing it and the viewers can do it, too. >> what i find so interesting is your first tip, when thinking about starting up a business has nothing to do with the business. you say create a life plan.
>> absolutely. you know, all of that business stuff should only be in the context of who you are, what you're all about, what you want to do with your life so life plan means understanding your skills, passion, desires, what your practical realities are and when you know all of that, you are then ready to start thinking about the business that's right for you. >> understanding that you are not going to see the light of the day or family for a few years. >> that might be. >> i'm joking but that completely legitimate. >> that might be okay, by the way. if you're that passionate and if you have that fire in your belly, you will throw all of the hours you possibly can at a business and success dependent on that kind of energy. >> you generally need to. secondly, create a business model. >> yes, a part time endeavor with a day job. an online business. you might want to create a business and list things in
amazon store. you can also create a franchise, if you will. become a franchisee of a proven formula business. >> there are a lot of options? >> yes. >> once you have that down, your business plan. we hear a lot about business plans. >> the business model will suit the life plan and realities you seek, and the business plan will distill down the key strategies and key resource that is you need. what management you need in place. what kind of money you are going to need. how you will develop customers and ramp up revenue over time. the marketing strategies and that's your sanity check, by the way. most importantlyt document doesn't need to be pretty using it for yourself. only when you present it to a banker or an investor or perhaps some key employees to hire, then does the document need to become more structured and formalized. >> this is interesting. this is all before you hire the first person. buy the first thing. there are things to think about. then you start actually doing something. you create a structure. >> yes.
that's right. a structure for your business is really there to make sure that you're protected and that your business activity is optimized to your benefit. so an llc, a limited liability company is a common structure these days. but you might also want to have an s corporation or c corporation. these kinds of options are available to you and you should consult an attorney and i think an account apt, as well, to figure out the best structure for you. i don't recommend going down the road too far as a sole proprietor because you are too exposed. >> and so, once you get all of these things done, then you're read doi start building assets, getting funding, hire people, et cetera. you have us on the road what to do to before you even kind of start. >> that's right. this is about laying the groundwork for a future success. >> rich, thank you so much. so good to see you again. >> like wise, j.j. keep it up.
without any capital, it's difficult to get a business off the ground. so if you're looking for a cash infusion, our website of the week may be able to help you secure financing. go4mondaying.com connects entrepreneurs with possible investors. you can post information and the amount of money looking for. potential investors can then contact you directly if they're interested in your company. ♪ bottle of wine fruit of the vine ♪ today's elevator pitcher is looking for money and energy looking for boost to sales for the product line. >> hi. i'm deborah ross. ceo of deborah ross designs in california. i'm designer for 30 years and fwhil napa valley, buying wine for friends, i couldn't find a decent gift bag. hence the wine bag. we have a patent pending and to the best of my knowledge, it is
the only message gift wine bag in the world. give ago bottle of wine, they don't have to buy a greeting card. it is already on the bag. we sell to some of the most prestigious wineries in california as well as an upscale division of hallmark and we have just gotten the first order from whole foods. we opened a factory in may and looking to raise $500,000 for sales force to cover the 5,000 wineries in the u.s., then wine shops and tasting bars. and to expand our factory. >> deborah, i have to say, congratulations on the success so far. that's great for a start-up. let's hear what these guys have to say. did she hit it snaul. >> she told us a lot of important information. congratulations on already having sold 12,000 of these bags. >> thanks. >> that's phenomenal. i also loved how you identified
the market potential that still lies ahead and what you're planning on doing with the money. >> gene? >> big question, can you wrap them around a six pack? i thought you did a great job, as well, deborah, really. the fact to focus on the market is really, really good. investors want the know they're financing growth. they're not taking a big, big chance. >> yes. >> using names like hallmark and other companies -- >> whole foods. >> whole foods. >> first one. >> great stuff. really is. >> this is what particularly in these times what investors are looking for. not taking as much of a risk as a bunch of years ago. i'm guessing the answer. would you take another meeting? >> yes, definitely. >> no question at all. i like the idea well. >> all right. well, great. good luck with everything. >> thank you so much. >> thank you for everything today, as usual. if any of you have a product or service and you want feedback from our panel on the chances of
getting interested investor, send us an e-mail at firstname.lastname@example.org. include a short summary of what your company does, how much money you're trying to raise and what you intend to do with the money and you never know. somebody might be interested in helping you. throughout the show today, we have talked about all kinds of strategies to help you run a success start-up. here are five common start-up mistakes and how to avoid them courtesy of fast company.com. number one, not validating the market. make sure there's a consistent market for what you're offering. two, underestimating costs. it may take more resources than you expected to get the initial business plans off the ground. three, engaging with your potential customer base too late. start marketing your company long before you take your product to market. four, inefficient pricing. once your good or service is ready, try to find a balance
between charging enough for expenses but not so much you discourage new customers. and number five, hiring the wrong people. make sure you hire a staff that can handle working in a fast-pace start-up atmosphere. to learn more about today's show, click on yourbusiness.msnbc.com. you will find all of today's segments and web exclusive content with more information to help your business grow. next week, it's one thing to start a business during an economic downturn but could it be a good time to franchise your company, as well? >> i personally had a lot of friends look at me and tell me i'm crazy in this time. nobody's spending money. if you go out, everybody is spending money. >> find out why one business owner believes he's got a sweet recipe for franchise success. until then, i'm j.j. ramberg. and remember, we make your business our was.
during times like these it seems like the world will never be the same. but there is a light beginning to shine again. the spark began where it always begins. at a restaurant downtown. in a shop on main street. a factory around the corner. entrepreneurs like these are the most powerful force in the economy. they drive change and they'll relentless push their businesses to innovate and connect. as we look to the future, they'll be there ahead of us, lights on, showing us the way forward. this is just the beginning of the reinvention of business. and while we're sure we don't know all the answers, we do know one thing for certain, we want to help.